Everything you need to know about Music Licensing

To begin with, it’s important to distinguish between two terms - music publishing and music licensing. Music licensing is concerned with the transfer of rights from a songwriter/record label/publisher to a second party to use music for a certain commercial purpose and for a particular time period. In most cases, licensed music is used in broadcast media such as films, Netflix series, video games, podcasts, TV programs, any YouTube or commercial videos, and all kinds of advertisements (on TV, radio, or online). A music license will determine what purpose the track will be used for; how to use it correctly based on the type of the music license and what financial amount will be collected for the transfer. In simple terms, a music license is an authorization to use the music for a specific purpose in a defined period of time.

Music Publishing, on the other hand, can be defined as the management of a recorded music track for commercial purposes, meaning with the aim to generate profit through the record. The songwriter and composer can either take care of their music’s publishing themselves or can sign a contract with a publishing company or a publisher. A publisher then ensures that the composer/songwriter receives payment when their composition is commercially used, from live shows to radio plays.

Self-publishing may seem more profitable as the artist will get 100% of the money generated through royalties. However, it’s very time-consuming and requires a strong network of contacts in the industry. The publishing agreement will state how the rights to the record will be assigned to the publisher/publishing company and what percentage they will take of the royalties generated.

In a nutshell, while a music license stands for the agreement allowing the transfer of rights to a music track for commercial purposes, music publishing refers to the management of agreements that are signed for a particular track that will be used commercially.

Intellectual properties in music have always played an essential role in broadcast media - whether it concerns movies, TV series and programs, or podcasts and radio broadcasting. Landing one’s music in any type of mainstream media has become an important source of profit for musicians, particularly independent ones. However, music licensing may certainly seem complicated and, perhaps, confusing, and it’s therefore important for musicians to understand what rights they have, what benefits music licensing offers, and what profit they may actually gain.

As a documented agreement, a music license grants permission to a particular individual or a party to use a writer’s and composer’s copyrighted music property for a given purpose during a stated time period, under the law. Such a legally enforceable document guarantees that under negotiated conditions and circumstances, the copyright holder - a composer and author/record label - will be paid while giving the right to someone else to utilize their music.

The owner of the copyrighted music is also the owner of exclusive rights to distribute, reproduce, perform, display, and adapt the copyrighted work of art, as well as authorize someone else to exercise these rights. This suggests that for others to exercise such rights, a license needs to be obtained and fees need to be paid. Without any license, or an appropriate one, not only that particular work of art is used illegally, but also, the owner does not earn the money they are entitled to.

A music license, therefore, serves as a protection of both the user and the owner of the copyrighted music and enables the artists to gain the income they need to continue creating music.

Who is the song copyright owner? Typically, the composer of the music and the writer of the lyrics are the first owners of the copyright in the musical work. A recording artist may also be the owner of the copyright if they write and/or compose the song, too. If a record label finances the recording of the song, they overtake the copyright in the sound recording and, depending on the record deal, they may own the copyright in the musical work, too. The record label will also own the physical recordings copyright.

Now that we know what music licensing is and why it’s important to have a clear understanding of its significance, we shall move to how you, as a musician, can actually license your music and what factors, steps and terms are important to focus on.

To know how to license, you need to first know what actually is or are the properties that get licensed. One may think it’s simply the ‘song’ used for a particular commercial purpose. However, every piece of music typically exists in many different forms - as sheet music, as a public live performance, as a track on your EP, or, most importantly, as a master recording. Master recording, also known as ‘masters’, refers to the official original recording of a song and the version from which all later recordings are made, including the published version.

It’s important to bear in mind that the master recording has its own copyright and so it’s the primary version of the song that needs to be licensed. That means that when someone from TV, film, or radio, wants to get permission to use your published song, they actually need to obtain the permission for both the publishing and master rights.

Who owns what rights very much depends on the type of musician you are and the agreements you have with other parties. The previous part of the guide suggests that there are two copyrights - the master and the publishing (to know more about royalties and copyrights, read this guide). If you’re an independent musician - a composer, writer, and a recording artist -, who is also responsible for the publishing of the recording, you are the owner of both copyrights.

In case you have signed an agreement with a recording company, particularly a big record label, there’s a high chance that they are the actual owner of your master recordings. This, however, depends on the record deal you’ve concluded.

Additionally, if you have a deal for your songs with a publisher or a publishing company, they are the ones that will manage and represent your interest in the license, as well as collect any incoming fees on your behalf.

One also needs to take into account that a song usually has more than one author, of whom all generate particular profit through collecting royalties. That may make music licensing more complicated as it means that more parties will be involved in the process of obtaining permission to commercially use the song. It may get even more complex if a record label pays for the recording and is therefore the owner of the masters.

When it comes to music licensing, there are three types of payments that need to be made for a license - ‘master recording sync fee’, ‘publishing sync fee’ (both make up the ‘sync fee’), and performance royalties.

The ‘sync fee’ is offered by the potential individual or a party acquiring the license. As an amount, it can range from simply 0 to millions of USD or EUR, depending on the type of use as well as the popularity and commercial success of the artist and the song. The ‘sync fee’ is paid to both the owner of the master recording (most commonly a record label) and the owner of the published song (typically a publisher/publishing company). As an independent artist, you will be entitled to both fees.

The third payment is the royalties that are generated each time the song is broadcasted. There are different types of royalties depending on the type of the license obtained, such as performance royalties, mechanical royalties, sync royalties, or digital royalties. The performance royalties are usually collected by so-called Performing Rights Organizations (PROs), also known as performing rights societies, like ASCAP (U.S), BMI (U.S), GEMA (DE), or PPL (UK). Every quarter, PROs count the collected performance royalties based on the calculation of how many times a song was aired, and then distribute them to the songs’ owners.

Other types of royalties are then collected by Collective Management Organizations (CMOs). Some organizations may function as both PRO and CMO - e.g BMI, GEMA, or SESAC.

While collecting and distributing performance royalties is an important function of PROs and CMOs, their primary purpose is to serve as intermediaries between rights holders (musicians and songwriters) and customers (second parties that want to use their songs). They are also responsible for representing and negotiating on behalf of the rights holders, especially in terms of royalty rates and licenses with potential users.

They are therefore key players in the music licensing industry responsible for licensing public broadcasting of musicians that are members of their organizations. Broadcasters usually enter into so-called ‘blanket licenses’ that allow them, for typically an annual fee, to access the whole catalog of a particular musician and use as many licensed songs as they want. Such licenses authorize the broadcasters to play the songs using different types of media - radio, TV, as well as streaming platforms such as Spotify, Deezer or Apple Music.

Depending on the media used, different types of rights may be licensed - there are e.g. public performance rights for when the music is to be played in clubs or restaurants or the right for broadcasting, used for TV or radio stations. Mechanical rights, for example, represent the right to record, manufacture and distribute the copyright holder’s musical work or sheet music.

Joining a Performing Rights or a Collective Management Organization is rather a simple step - however, one needs to be prepared that it may not be for free. Any individual needs to first decide whether they want to join the organization as a writer or a publisher, or both. The conditions and requirements for a membership as well as the length of a contract very much depend on the organization.

The largest PRO is BMI, a non-profit organization founded in 1939. They offer membership to anyone with writers paying no fee at all and publishers paying around $150-250. A contract for writers lasts 2 years and publisher contracts last 5 years.

The ASCAP is a bit smaller than BMI and offers membership to both writers and publishers equally for $50 ($100 if they want to register as both). The contract with ASCAP lasts only one year for both the writers and publishers - afterward they can choose to renew the contract or switch to a different organization.

Some PROs or CMOs may have special requirements for musicians and publishers. For instance, the SESAC, unlike the others, is a pro-profit and exclusively invite-only organization. Some organizations may also first invite you to an interview to consider whether you’re the right candidate for a membership or not.

Firstly, it’s essential to know that as a writer, you can only be a member of one PRO or CMO. Publishers are allowed to work with more organizations at the same time.

Secondly, picking a PRO or CMO should not be a decision to overthink. You can ask your colleagues and peers from the music industry to get some tips or you can attend some events and get in touch with employees of the particular organization. Trying to establish a rather strong relationship with the organization upfront may definitely help. If you don’t get any tips or you’re simply unsure, go for the place that gives you the best offer in terms of the membership fee, length of the contract, and additional benefits. The PROs/CMOs also differ based on the country you’re in!

Apart from the PROs and CMOs, there are also plenty of third-party companies or music libraries that will take care of the music licensing for you - negotiating the conditions or pitching to prospective customers. The third-party licensing companies will most likely take a portion of your sync fee but will allow you to control your publishing and collect all the performance royalties.

A deal with a music library may not be that financially convenient - they usually take up-front fees that are quite costly. On the other hand, they may be pretty effective in selling the music to anyone who wants it and will also allow you to collect your performance royalties.

Although dealing with music licensing may be more difficult as an independent artist, you don’t have to do it all yourself! If you publish your music through a publisher or a publishing company, they will also manage the copyrights on your musical works, including taking care of music licensing.

In case you do your publishing on your own, the best option would be to choose and sign with the third-party music licensing company, that will be responsible for confering both private and public performance rights, registering your music with prospective PROs/CMOs and collecting royalties.

Although as an independent musician you’re mostly interested in having others license your music, it may also happen that you yourself may need to get a music license - e.g. when you want to record a version of another musician’s song or you want to perform that song publicly.

To acquire such licenses, you can directly contact the particular PRO or CMO that will either be able to grant them or provide you with contact information to a publisher/publishing company or the record label. PROs/CMOs usually have their databases available on the internet so all you have to do is to search their repertory to determine if a song you’re looking for is a part of it. Record companies normally have licensing departments or business & legal affairs departments that deal with such matters.

As mentioned before, different rights exclusive to copyright holders, such as distribution, reproduction, performance, etc., may be transferred to a prospective user of a musical work, depending on the type of license. These are some of the most important and common music licenses:

Sync licenses are probably the most common and used type of music licensing allowing users to use the song in audiovisual projects or moving images, such as films, TV programs, or commercial videos. When the music is so-called synchronized with the chosen project meaning it’s reproduced as part of the soundtrack, a ‘synchronization licensing’ is necessary.

Sync licenses are usually requested and obtained by producers, on behalf of a network or a broadcasting company, from a publisher or a songwriter. It’s important to know that a sync license allows the reproduction of the composition; the recording of the audiovisual project requires an additional music license - a master license.

The biggest difference between a sync license and a master license is that the latter transfers the rights to the original recording of the song (the masters) to the user. The sync license, on the other hand, allows one to use the composition and make a new version of the original song. They are, however, both necessary to acquire if you want to use a song in audiovisual media.

The master license is typically held by the person who owns the recording - typically, either the record company that has financed the recording of the piece of music or, in the case of an independent artist, it’s the artist themselves.

The public performance license, also known as the public communication license, allows parties to use a song for public broadcasting, including concerts, radios, television, or public places such as stores and restaurants. In other words, a public performance license needs to be obtained every time music is reproduced for a public audience.

Licenses of this type are usually held by the already mentioned Performing Right Societies that will then collect and distribute the performance royalties.

The mechanical license, also known as a reproduction license, allows the licensee to record a track in a medium or support to reproduce and afterward distribute it. This is mostly necessary for a recorded song on a CD, DVD, vinyl, or cassette. The license also allows duplication and so the user may obtain copies of the track.

Such a license is also needed when a musician wants to record their own version of someone else’s song or when a video covering the music track is exported both in a digital or physical format.

The print license provides the licensee with the right to print out, meaning make copies of a physical format of the scores of a particular song.

You will need the license if you want to write, print or sell the score of the song - e.g. use some lyrics of the track on the cover of a CD or in the subtitles of a YouTube video, etc.

Theatrical licenses, as the name says, are only used in the theater allowing the licensee to perform a song on a stage in front of a live audience - e. g. theatrical play or a musical performance.

However, there are many songs available for which the user doesn’t have to pay royalties and so doesn’t need to acquire any of these licenses. Such songs require alternative licenses, known as ‘royalty-free music licenses’, that are available at a much lower price in comparison to the other licenses.

There are many royalty-free licenses available and freely accessible on the internet - it just depends on what music you’re looking for and what you’ll use it for. A Swedish company called Epidemic Sound is considered the best license for YouTubers and content creators and has more than 30,000 songs and 60,000 sounds in its library. The company offers two subscription plans - ‘personal’ for $15/month and ‘commercial’ for $49/month.

If you’re also an artist and need some royalty-free music for your film productions or commercials, a company called Artlist may be the right choice for you. It’s an Israeli start-up founded in 2016 and offers a ‘Universal License’ for $16,60/month (or $199/year).

Last but not least, Envato Elements offers the best royalty-free music licenses for websites, apps, video games, and audiobooks and its library contains over 90,000 music tracks and sounds. You can get access to them for just $15/month! Additionally, a part of Envato Elements is also Audiojungle, a music license platform specialized in radio and TV headers. You can choose between a ‘Standard’ license for around $26-$29 or a ‘Mass Reproduction’ license for between $80 and $100 per license.